RIL charging 'illegal' margin on K-G gas: RNRL

Reliance Natural Resources (RNRL (RNRL.NS : 88.3 -0.05)) on Sunday echoed its attack against Reliance Industries (RELIANCE.NS : 2153.15 +12.3) (RIL) and alleged that RIL was charging illegal and unauthorised margin on the sale of K-G D6 gas. RNRL, in a conference call with reporters, accused that RIL was charging marketing margin without the approval of empowered group of ministers (eGoM). The company claimed that power and fertilizer units, which have already signed gas sale purchase agreements, are expected to bear an additional burden of over Rs 10,000 crore due to the marketing margin charged by RIL.

RNRL seeks the urgent intervention of the government, in broader public and national interest, to immediately stop RIL's levy of "marketing margin" on sale of gas. Also, the margin levied till date should either be refunded immediately or adjusted against future sale of gas. However, RIL sources did not even react to RNRL's claim.

Incidentally, state-run NTPC has raised the issue of marketing margin charged over and above the gas price of $4.2 per million British thermal unit (mmBtu) and it has declined to sign gas sale purchase agreement with RIL for the supply of 2.7 million cubic meters per day of K-G D6 gas for its power projects, excluding Kawas and Gandhar. In fact, NTPC has appealed to the centre that the group of ministers led by finance minister Pranab Mukherjee settles this issue.

RNRL explained that RIL was charging an illegal and unauthorised marketing margin of 13.5 cents per mmBtu on the sale of K-G D6 gas. This marketing margin accounts for over 3% of the price at which gas is being sold. The government does not benefit by even a single rupee, the entire profit goes to RIL alone and the government is denied its lawful share and, on the other hand, made to pay for this in form of enhanced subsidies. Further, the government undertaking GAIL (GAIL.NS : 353.05 +2.9) is not permitted to charge similar marketing margin on the sale of gas.

On the contrary, petroleum ministry has categorically denied giving permission to RIL to charge any such marketing margin. "It is therefore all the more surprising that the ministry is taking no steps to immediately prevent RIL from charging this illegal levy. This once again strengthens the apprehensions about the biased and partisan approach of the petroleum ministry. The power and fertilizer sectors will have to bear a whopping additional burden of over Rs 10,000 crore, towards this illegitimate and unjustified charge claimed by RIL. The major burden will be borne by the government in form of subsidies and the governments of Andhra Pradesh, Maharashtra and Gujarat in form of power subsidies," RNRL noted.